It has been estimated that errors in hiring cost companies more than 50 billion dollars per year in lost revenue, decreased productivity, squandered training expenses, legal liabilities, high turnover and other undesirable consequences. The result, in spite of the dramatic increase in the use of background checks and psychological profiles by many organizations, and the universality of selection interviews, is that annual turnover in U.S. companies of over 5,000 employees continues to be 25%. According to experts in the field, nearly 80% of turnover is caused by poor selection decisions.
Therefore, background checks have become even more important than in the past. One part of the background check, and more generally the hiring process, is the gathering of information from references, that is those individuals identified by a job candidate as being knowledgeable about the candidate's character and qualifications.
Unfortunately, traditional reference checking methods such as telephone interviews are very costly and time-consuming, require extensive training for interviewers and generally do not yield useful information due to lack of precision, lack of confidentiality and possible errors of filtering, amplification and interpretations by the intermediaries. Most important, perhaps, is the fact that in today's litigious society, business and professional reference givers are usually unwilling to provide more than basic information such as employment dates and positions held. Such information has little value in helping companies make effective hiring decisions.
Another problem with the conventional reference checking is that it's done very late in the hiring process, which is typically done after the candidate is hired. Ideally, it should be done during the screening and selection process. Moreover, the conventional background checking provides no guidance for the hiring manager to further explore areas of weakness in the candidate during the hiring process.
Therefore, it would be desirable to provide a more effective and inexpensive system and method for collecting and evaluating information provided by reference providers for job candidates. It would be also desirable to provide such a system that is substantially automated and that is used early in the hiring process.